The 15% Figure Still Holds, but Only for Sole Proprietors and Partnerships

CMHC lets a self-employed borrower add 15% to their reported income when qualifying for an insured mortgage, and as of September 2026 that figure is unchanged. What deserves more attention is who it applies to. CMHC frames the gross-up for income earned through a sole proprietorship or a partnership. If you run your business that way, the number you may have seen in earlier planning articles is still the one to work with. If you've incorporated, it isn't.

How the gross-up works

The gross-up raises income. It is sometimes described as a "haircut," but that gets it backwards. The lender starts from the self-employed income you've reported and adds 15% on top before running your debt service ratios.

Here is an illustrative example. A sole proprietor whose tax returns show $80,000 of business income would be assessed on $92,000. That added $12,000 can matter at the margin, for example when deciding between two price points or whether a refinance clears the ratios.

The adjustment rests on documentation. CMHC asks for 24 consecutive months of financial statements for self-employed borrowers. The gross-up is applied to what those records show, so a borrower with patchy statements or a missing year has a smaller base to work from.

Why business structure decides it

A sole proprietor or partner reports business income on a personal tax return. That is the income the gross-up is designed around, and it's why the 15% fits so neatly for that group.

An incorporated owner earns money differently. The company earns it, and the owner draws some of it out. The 15% gross-up isn't framed for that arrangement, so incorporated owners shouldn't assume it applies to their personal income. For them, how income moves out of the company and how it's documented will drive the conversation. That's worth sorting out with your broker before you settle on a purchase budget.

The clarification matters most for owners who started as sole proprietors and later incorporated. Many of them still have the 15% figure in mind from an earlier conversation. Once the business structure changes, that figure may no longer describe how a lender looks at their file.

What to check now

If you're self-employed and thinking about a purchase or refinance in the next while, a few steps will tell you where you stand:

• Confirm your structure for the years being reviewed. Look at both your current structure and how you reported income across the two years a lender will look at. A year as a sole proprietor followed by a year incorporated is a mixed file. It should be discussed early, not discovered at underwriting.
• Line up 24 consecutive months of statements. Gaps or overlapping periods create questions, and questions slow down approvals.
• Mind the filing calendar. Sole proprietors have until June 15 to file, but any balance owing is due April 30. If your most recent return isn't filed or your balance isn't paid when you apply, expect that to come up. Filing promptly gives a lender your newest numbers to work from.
• Run the numbers both ways. Calculate your qualifying income with and without the gross-up. If the deal only works with the 15% included, be sure you're in the group it applies to before you commit to a price.

Insured mortgages also carry a premium. At 10% down, the CMHC premium is 3.10% of the mortgage amount. That cost is added to the loan. Your down payment and structure both affect it, so it belongs in the same planning conversation as your qualifying income.

A note for real estate agents

When a self-employed buyer tells you they've been pre-approved, ask how their business is set up. A sole proprietor relying on the gross-up and an incorporated owner with an untested income picture can carry very different risk through a financing condition. If the buyer isn't sure, that's a sign the condition period may need more room. It's also a good reason to get their broker involved before an offer goes in, not after.